Daily Data
Today, we're sharing a round-up of business headlines for you from around the country. Check out this news, hot off the press.
Seattle: Frenzied real-estate market imperils land conservation in Washington, Idaho
Austin: Prominent Austin investors back Major League Pickleball
St. Louis: Starting in St. Louis, this startup wants to keep seniors in their homes longer
Boston: Boston Office Space Demand 24% Above Pre-Pandemic Level with Life Sciences Tenants Leading Demand
Your Quick-Start Guide to Commercial Real Estate Investing
This is the second in a multi-part series on commercial real estate investing. Read the first part in last week's insights.
Commercial real estate (CRE) may be a good alternative for some investors looking to diversify their portfolios. The recession softened commercial property prices in some markets, and as the pandemic comes to an end, commercial spaces will likely bounce back.
The pros of investing in commercial real estate are similar to the pros of residential real estate but not identical.
PRO: High Return Potential
Although the property is more expensive than a residential property, commercial spaces rent for a lot more than homes do. Increased income margins mean more wealth-building and opportunity to scale.
PRO: Low Turnover
Commercial leases tend to be long and many businesses are reluctant to move. Low turnover means that you maximize your cash flow.
PRO: Diversity
There’s a niche for everyone in commercial real estate. You can truly specialize in a certain type of commercial property based on your ability and risk tolerance.
PRO: Reduced Management Burden
Although managing CRE is a tough job, you’ll find that the management burden, in some respects, is less. You’re not going to have business owners calling you at all hours of the night about overflowing toilets. Your residents will likely cause fewer problems, too, as they should want to maintain a level of professionalism.
PRO: Less Market Competition
The buyer pool for commercial properties is limited to investors. They may vary in size and reach, but you don’t have to compete with the Average Joe as you would in residential real estate.
But, lest we forget, there are certainly some cons to consider as well...
CON: Limited Exit Strategies
Although you have less competition as a CRE buyer, you have fewer options as a seller. You have to find another investor or investment company to take the property off of your hands when you want to unload it.
CON: Higher Price Tags
CRE presents a steep barrier to entry in its price tag alone. Commercial property values are assessed partly by square footage. Because you’re looking at often massive properties, this alone can push property price tags upwards of $1,000,000.
CON: Lending Challenges
Lending standards are already tough for the average homebuyer. Commercial real estate deals with higher price tags, so qualifying for a loan is that much more difficult.
CON: Recession Challenges
COVID revealed unique challenges for the commercial world. Although residential real estate thrived, commercial real estate struggled due to the recession. Many people lost their businesses or reduced their office spaces to save money — meaning plenty of newfound commercial vacancies.
What do you think, do pros or cons win out? Tag us with your CRE stories!
Don't Waste Your Windfall
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Do you know how you would handle unexpected cash?
Most of us won't win the lottery or receive a fortuitous inheritance—but we all have our little windfalls.
How you manage your bonus, your tax return, dividends, and the wiggle room in your budget is more important than imagined riches.
Read the full article here.
The Take
Wondering if the grass is greener on the other side? Today's in-depth read is a helpful comparison of regional markets, and what you can expect when delving into top cities across the country.
Click the picture above to download the Take of the week!
The Word
Check out our recommended reading for the week:
- Suburban Homes and Retail Are the Budding New Office Hotspot (Wall Street Journal)
- If you're having trouble finding a residential renter, don't worry. You might get a commercial one before long. More Americans are working from home than every before, so flexibility (and comfort?) is the name of the game.
- Why should you care? This is another major reason for diversity in your portfolio. That former small-town diner may be a WFM mecca before you know it.
- Demand rising among seniors to rent rather than own in active-adult communities (Washington Post)
- With over a hundred million Americans now renting, rental standards are on the rise regardless of age!
- Why should you care? All these new renters are willing to pay extra for the extras.
- Can I Say "No Pot in My Apartments" When It's Legal in my State? (Rental Housing Journal)
- As more and more states make the move to legalize, it's worth knowing your rights—not to mention the pros and cons—before outlining your expectations in your lease.
- Why should you care? Taking a stance one way or another will incentivize your potential residents accordingly.
